The Republican activist who filed a challenge to Eliot Spitzer’s petitions for comptroller is pulling the plug on the effort — citing a lack of funds to underwrite the legal costs.

E. O’Brien Murray said well-heeled donors who could bankroll a court challenge to try to knock Spitzer off the ballot are hesitant to do so. They worry about retribution if “Steamroller” Spitzer survives the challenge and is elected comptroller, he said.

Murray said he will not likely follow through with specific objections by midnight Tuesday.

“As of right now, we can’t continue the challenge. Because people are afraid of retribution, Spitzer gets a free pass on this,” Murray said.

Murray claims Spitzer’s residency could be raised as an issue in court. Spitzer clearly states in his petition that his residence is 985 Fifth Ave. – though The Post reported that he’s been staying at his parents’ address 18 blocks away. In recent interviews, Spitzer – who in 2008 resigned in disgrace as governor following a hooker scandal – has dodged questions about whether he’s been living separate from his wife, Silda.

Murray also said questions could be raised about whether Spitzer improperly paid canvassers per signature.

Spitzer maintains that he legally collected the required number of signatures from registered Democrats to get on the ballot. He collected more than 27,000; 3,750 legitimate signatures are needed.

Murray’s decision to back away from the court challenge was welcome news for Spitzer’s camp.